Taking overHave you been involved in M&A in your own career?

Issues concerning shareholder integration in mergers and acquisitions (M&A) have recently provided a welcome distraction from the predominant shareholder issue of 2012 – remuneration packages. Undoubtedly, the commodities group Glencore, which has been in talks with rival commodities giant, Xstrata, over one of the largest potential M&A deals, will disagree. Nevertheless, we wanted to open up this discussion to the Chartered Secretary/CSS panel to gain a broader sense of the company secretary’s role and the shareholder’s involvement in M&A.

One hundred per cent of our panel – our strongest statistic yet – considered the role of the company secretary to be an important one during M&A, with 85% affirming that they had been involved in at least one during their careers.

One of the key reasons behind the postponement of the Glencore/Xstrata £50 billion merger, which, if approved, would create the world’s largest multinational commodities trading and mining company, is because of shareholder angst over the terms of the proposed agreement. In light of this, we wanted to ask our corporate governance community if they felt M&A should be solely motivated by shareholder value, in keeping with directors’ fiduciary obligation to their shareholders; or whether other factors such as public interest should

‘They also play a key coordination role in the company between it and its shareholders, so they need to be an intrinsic part of the process in order for it to run smoothly, especially in Class 1 or Takeover Code governed deals. These deals often involve complex capital structures, the concepts of which company secretaries are the most familiar with. The challenge can sometimes be getting others to recognise this,’ he furthered.

This year has shown an upsurge of shareholder activism, with rebellions against undue executive remuneration packages never being too far away from the headlines. We wondered, though, if this ‘louder’ shareholder voice is extending to other business matters. Having already established that shareholder value is one of the most important motivations behind a successful M&A, it is perhaps unsurprising that 84% of the Chartered Secretary/CSS panel believe that there is increasingly more shareholder activism stretching into the realm of M&A.

A shareholder vote on Glencore and Xstrata’s merger has now been set for September as shareholders battle for improved terms and protest against multimillion-pound payouts for directors. In addition, the delay will also give Glencore’s Chief Executive, Ivan Glasenberg, more time to hammer out a deal with Qatar Holding, Xstrata’s second-biggest shareholder, which is demanding a larger payout from the deal. What has become clear from this month’s Quick Question is that the company secretariat in both companies, are going to be kept busy.

» Quick question

be taken into account. While 73% responded by saying that other factors should also be taken into account, when we reviewed the additional comments, we have found that many respondents saw shareholder value as perhaps the most important factor to be taken into account. However, other factors that were raised, which should be considered as motivation for successful M&A, included: all other stakeholders, reputation, public interest, employees and long-term prospects.

Further to this, we also wanted to know to what extent the company secretary should be involved in shareholder and board integration as part of a successful M&A. This particular feature of the role of the company secretary ranked highly amongst our panel, with 85% agreeing this to be an important responsibility. However, our respondents felt that, while this is a significant aspect of their role, they also thought there were several others areas which they believe a company secretary should bear in mind while assisting in M&A. These included: program management, performing their duties to shareholders, ensuring appropriate governance and general ‘hands on’ board support.

One respondent commented: ‘The company secretary will often know how a company’s structure operates better than anyone. This holistic overview is extremely important in M&A situations, as they know how to channel information quickly.

85%: Yes

15%: No

Conducted in association with Company Secretarial Services

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If you’re a company secretary of a leading UK business, and you’d like to take part in or comment on future surveys, e-mail Caroline Evans at CSS on cje@blt.co.uk.